Thyssenkrupp overhaul must happen more quickly to get through pandemic crisis, CEO says

German engineering giant is in the midst of a restructuring process that will see its elevator business sold to private equity buyers for €17.2bn

FILE PHOTO: Martina Merz, CEO of German conglomerate Thyssenkrupp AG, gestures during the annual shareholders meeting in Bochum, Germany, January 31, 2020.  REUTERS/Wolfgang Rattay/File Photo
Powered by automated translation

Thyssenkrupp has less time for a wide-ranging restructuring plan than previously thought as the coronavirus pandemic is significantly burdening the already ailing conglomerate, its chief executive said in a note to staff.

"The difficult economic situation at Thyssenkrupp is being significantly intensified by corona. The company is in a serious situation," chief executive Martina Merz said in the note sent last week.

Late last month the group secured about €1 billion (Dh4bn) in state aid to tide it over until it receives the money from the sale of its elevator division, two sources told Reuters.

In her note, Ms Merz said restructuring moves, cost cuts and, above all, measures to increase sales that the group had planned to implement over the next two to three years needed to be implemented significantly faster due to the pandemic.

"Moving boundaries, thinking boldly, not ruling anything out – we really need to buckle down to the next plan," she added.

Ms Merz said the longer the pandemic lasted the more it was eating up the expected proceeds from the sale of its elevators unit, adding management would discuss this with its supervisory board on May 18.

Thyssenkrupp in February agreed to sell its elevator unit to a consortium led by private equity firms Advent and Cinven for €17.2bn and to reinvest €1.25bn of the proceeds in the business.

The deal was expected to close by the end of September, but could now complete over the summer, Ms Merz said. Until then the group is bleeding cash, she said, explaining its reasoning for talking to state-owned bank KfW about additional funds.

Thyssenkrupp is scheduled to publish second-quarter results on May 12. Ms Merz said she did not expect industrial demand to recover soon.